Watching to see if hawks emerge at upcoming BOE decision

Notes/Observations

- BOE seen keeping policy steady inflation rebound; focus on QE vote.

- Overall markets weighing the prospects of economic recovery against the risk of possible curbs to stimulus measures.

- German industrial orders beat expectations but supply bottlenecks weigh.

- Busy Corporate data day: Companies due to report during the NY morning include Atlas Air, Arrow Electronics, Bombardier, BCE Inc, Becton Dickinson, Berry Global, Cardinal Health, Cars.com, CIGNA, datadog, Fiverr International, Gildan Activewear, Hanesbrands, Huntington Ingalls, Himax Technologies, Iron Mountain, Kellogg, Moderna, NRG Energy, Penn National Gaming, Parker Hannifin, Party City, Papa Johns, Regeneron, Revlon, SeaWorld, Stratasys, Tenneco, Thomson Reuters, ViacomCBS, ViaSat, Wayfair, DENTSPLY, Zoetis.

Asia

- Australia Jun Final Trade Balance: A$10.5B v A$10.5B prelim; Exports M/M: 4% v 6%e; Imports M/M: 1% v 4%e.

Coronavirus

- France to be removed from UK's Amber-plus travel restriction list for the fully vaccinated.

- US said to be considering a plan to require all foreign visitors to be vaccinated for the coronavirus.

Europe:

- Ireland Fin Min Donohoe (Eurogroup chief) saw the likelihood of a global tax deal, happening now, more than ever before.

Americas:

- Fed's Daly (non-voter, dove) reiterated that Fed would do something on asset purchases late this year or early 2022.

- Fed's Kaplan (non-voter; hawkish): Taper of bond purchases should start 'soon' and be gradual.

- US State Dept approved sales of military equipment to Taiwan in proposed $750M deal (1st such deal under the Biden Administration).

- Brazil Central Bank (BCB) raised the Selic Target Rate by 100bps to 5.25% (as expected) for its biggest rate hike in 18 years. The decision to raise rates was unanimous. Rate adjustments reflected worsening CPI, several core CPI measures above target and appropriate for this rate hike cycle to raise key rate above neutral. Expected to raise rate by another 100bps at next policy meeting.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.39% at 470.04, FTSE +0.05% at 7,127.25, DAX +0.20% at 15,723.35 , CAC-40 +0.54% at 6,782.64, IBEX-35 +0.15% at 8,806.00, FTSE MIB +0.26% at 25,555.50, SMI +0.15% at 12,196.68, S&P 500 Futures +0.23%].

Market Focal Points/Key Themes: European indices open mixed but later moved to trade generally positive; plethora of earnings major theme of the session; sectors among these trending higher include technology and industrials; while materials and consumer discretionary among those leading to the downside; DAX weighed on by disappointing results from Adidas, Continental; Bayer acquires Vividion; Enel divets stake in Open Fiber; reportedly Unilever looking to sell stakein tea business; earnings expected during the upcoming US session include Nice, AES, Banco BMP and Ball Corp.

Equities

- Consumer discretionary: WPP [WPP.UK] +2% (earnings), Adidas [ADS.DE] -4% (earnings), Deutsche Post [DPW.DE] -1% (earnings).

- Financials: Credit Agricole [ACA.FR] -1% (earnings).

- Healthcare: Merck KGaA [MRK.DE] +5% (earnings), Bayer [BAYN.DE] -5% (earnings; acquisition).

- Industrials: Siemens [SIE.DE] +3.5% (earnings), Rolls Royce [RR.UK] +3% (earnings), Continental [CON.DE] -2% (earnings), Lufthansa [LHA.DE] -2% (earnings).

Speakers

- ECB Economic Bulletin noted that considered that price stability was best maintained by aiming for a 2.0% inflation target over the medium term.

- France President Macron: Quite likely that a 3rd covid dose will be needed for the elderly and most vulnerable.

- Japan M Suga announced that it would expand Covid-19 restrictions to more prefectures but not thinking of declaring a State of Emergency (SOE) for the whole country (**Note: Tokyo said to report >5.0K new coroanvirus cases for a fresh record high).

- Fitch affirmed Singapore sovereign rating at AAA; outlook stable.

- Israel Defense Min Gantz: Israel was prepared to attack in Iran.

- Biden Administration said to unveil goal and new car emissions standards later today. President to o sign executive order for half of cars sold to be emission-free by 2030.

Currencies/Fixed Income

- FX markets were dull despite some divergence on the rate outlook among the G7.

- USD mainly steady after several Fed comments on Wed led markets to move forward the likely timing of a policy tightening.

- GBP in focus with BOE policy decision. Dealers watching for hints to tapering a.

Economic data

- (NL) Netherlands July CPI M/M: 0.5% v 0.2% prior; Y/Y: 1.4% v 2.0% prior.

- (NL) Netherlands July CPI EU Harmonized M/M: 0.6% v 0.1% prior; Y/Y: 1.4% v 1.7% prior.

- (DE) Germany Jun Factory Orders M/M: 4.1% v 2.0%e; Y/Y: 26.2% v 22.9%e.

- (FR) France Jun Industrial Production M/M: 0.5% v 0.5%e; Y/Y: 7.1% v 7.5%e.

- (FR) France Jun Manufacturing Production M/M: 0.9% v 1.4%e; Y/Y: 7.5% v 22.1% prior.

- (CZ) Czech Jun Retail Sales Y/Y: 9.7% v 7.3%e; Retail Sales (ex-auto) Y/Y: 7.2% v 5.4%e.

- (DE) Germany July Construction PMI: 47.1 v 47.0 prior.

- (UK) July New Car Registrations Y/Y: -29.5% v 28.0% prior.

- (TW) Taiwan July CPI Y/Y: 2.0% v 1.9%e; CPI Core Y/Y: 1.3% v 1.3%e; WPI Y/Y: 11.8% v 10.7% prior.

- (TW) Taiwan July Foreign Reserves: $543.1B v $543.3B prior.

- (UK) July Construction PMI: 58.7 v 64.4e (6th month of expansion).

- (CY) Cyprus July CPI M/M: 0.1% v 0.3% prior; Y/Y: 4.0% v 3.1% prior.

Fixed income Issuance

- (ES) Spain Debt Agency (Tesoro) sold total €4.66B vs. €4.0-5.0B in 2024, 2026, 2031 bonds.

- Sold €1.124B in 0.0% May 2024 SPGB bonds; Avg yield: -0.547% v -0.440% prior; Bid-to-cover: 2.27x v 2.02x prior (Jun 17th 2021).

- Sold €2.00B in 0.0% Jan 2026 SPGB bonds; Avg Yield: -0.441% v -0.245% prior; bid-to-cover: 1.57x v 1.99x prior (July 1st 2021).

- Sold €1.54B in 0.50% Oct 2031 SPGB bonds; Avg Yield: 0.199% v 0.354% prior; bid-to-cover: 1.30x v 1.79x prior.

- (ES) Spain Debt Agency (Tesoro) sold €M vs. €250-750M indicated range in 1.00% Nov 2030 inflation linked bonds (SPGBi); Real Yield: -1.333% v -0.889% prior; Bid-to-cover: 1.62x v 1.39x prior.

- (FR) France Debt Agency (AFT) sold total €7.498B vs. €6.5-7.5B in 2031, 2032 and 2034 bonds.

- Sold €4.160B in 1.5% May 2031 Oat; Avg Yield: -0.23% v 0.92% prior; bid-to-cover: 1.77x v 1.79x prior (Aug 6th 2020).

- Sold €1.133B in 5.75% 2032 Oat; Avg Yield: -0.17% v -0.26% prior; bid-to-cover: 2.79x v 2.08x prior (Dec 3rd 2020).

- Sold €2.205B in 1.25% 2034 Oat; Avg Yield: +0.01% v -0.09% prior; bid-to-cover: 2.31x v 2.13x prior.

Looking Ahead

- (RU) Russia July Light Vehicle Car Sales Y/Y: 2.5%e v 28.7% prior.

- (IL) Israel July Foreign Currency Balance: No est v $200.2B prior.

- (UR) Ukraine July Official Reserve Assets: $28.8Be v $28.4B prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell debt.

- 06:00 (IE) Ireland July Unemployment Rate: No est v 7.6% prior.

- 06:00 (RO) Romania to sell RON400M in 2.5% 2027 Bonds.

- 06:00 (RO) Romania to sell RON1.3B in 6-month and 12-month bills.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (UK) Bank of England Bank (BOE Interest Rate Decision: Expected to leave Interest Rate unchanged at 0.10% and maintain Total Asset Purchases at £895B (Gilt Purchase Target at £875B and Corporate Assets at £20B).

- 07:00 (UK) BOE Aug Minutes and Monetary Policy Report.

- 07:00 (ZA) South Africa Jun Electricity Production Y/Y: No est v 12.1% prior; Electricity Consumption Y/Y: No est v 12.3% prior.

- 07:30 (US) July Challenger Job Cuts: No est v -20.5K prior; Y/Y: No est v -88.0% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Jun Trade Balance: -$74.1Be v -$71.2B prior.

- 08:30 (US) Initial Jobless Claims: 383Ke v 400K prior; Continuing Claims: 3.255Me v 3.269M prior.

- 08:30 (CA) Canada Jun Int'l Merchandise Trade (CAD): -0.6Be v -1.4B prior.

- 08:30 (CZ) Czech Central Bank (CNB) Interest Rate Decision: Expected to raise 2-Week Repurchase Rate by 25bps to 0.75%.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (RU) Russia Gold and Forex Reserve w/e July 30th: No est v $594.5B prior.

- 09:00 (CL) Chile Jun Nominal Wage M/M: No est v -0.2% prior; Y/Y: No est v 5.8% prior.

- 10:00 (UK) Fed’s Waller on digital currency.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (RU) Russia July CPI M/M: 0.4%e v 0.7% prior; Y/Y: 6.6%e v 6.5% prior.

- 12:00 (RU) Russia July CPI Core M/M: 0.5%e v 0.8% prior; Y/Y: 6.7%e v 6.6% prior.

- 12:00 (CA) Canada to sell C$4.5B in 0.25% 2023 Bonds.

- (EG) Egypt Central Bank Interest Rate Decision: Expected to leave Deposit Rate unchanged at 8.25%; Lending Rate current at 9.25%.

- 15:00 (AR) Argentina Jun Industrial Production Y/Y: No est v 30.2% prior; Construction Activity Y/Y: No est v 70.9% prior.

- (MX) Citibanamex Survey of Economists.

- 19:00 (KR) South Korea Jun Current Account Balance: No est v $10.8B prior; Balance of Goods (BOP): No est v $6.4B prior.

- 19:00 (AU) RBA Gov Lowe Testimony to Parliament Committee.

- 19:30 (JP) Japan Jun Labor Cash Earnings Y/Y: 1.1%e v 1.9% prior; Real Cash Earnings Y/Y: 1.2%e v 2.0% prior.

- 19:30 (JP) Japan Jun Household Spending Y/Y: 0.2%e v 11.6% prior.

- 20:00 (CO) Colombia July CPI M/M: +0.1%e v -0.1% prior; Y/Y: 3.8%e v 3.6% prior.

- 20:00 (CO) Colombia July CPI Core M/M: No est v 0.2% prior; Y/Y: No est v 2.7% prior.

- 21:00 (PH) Philippines Jun Trade Balance: -$2.8Be v -$2.8B prior; Exports Y/Y: 9.9%e v 29.8% prior; Imports Y/Y: 28.8%e v 47.7% prior.

- 21:00 (AU) Australia to sell A$700M in 0.25% 2025 Bonds.

- 21:30 (AU) RBA Statement on Monetary Policy (SOMP).

- 23:30 (JP) Japan to sell 3-Month Bills.